Denmark's Shaky Welfare State

August 1, 2003

In Denmark, some 900,000 working-age adults live on government welfare programs full-time, year-round -- out of a total population of five million. Consequently, the country's massive welfare state will soon be untenable if birth rates do not rise to support its growing number of aid recipients and pensioners, says Per Henrik Hansen of the Copenhagen Business School.

Furthermore, Hansen says, the income redistribution scheme which characterizes Denmark's social democracy has resulted in less security and a lower quality of life:

The Danish Statistical Yearbook 2002 shows reported crimes from 1935 to 1960 to be stable: about 100,000 crimes per year.

But from 1960 until today, the number of crime reports has increased by 500 percent, to more than 500,000 per year.

The number of violent crimes in 1960 was approximately 2,000; it is approximately 15,000 today -- an increase of more than 700 percent, and it is still rising steeply.

This is a very surprising development, says Hansen, since welfare state advocates often say that crime is caused by poverty. But Denmark has become about twice as rich per citizen during this period of rising crime.

Another argument is that poverty is caused by economic inequality. Yet Denmark has engaged in the most comprehensive income redistribution program of any nation. Denmark is the most egalitarian country in the world today.

According to Hansen, massive wealth redistribution schemes -- that require a 70 percent tax burden -- reduce people's respect for property rights. Along with liberal immigration policies, this has spurred the increase in crime. The quality of health care and education has also fallen mainly because both are rationed by the government.